As previously said, budget cuts will be detrimental to project cost estimation. I believe that the timing of the cut can determine its ultimate damage to the project. Essentially everything downstream of the cut will have to be conducted in a much tighter window. The pressure to succeed and execute will be even higher since there is less wiggle room. If the cut is drastic enough, it can entirely halt all downstream processes and can essentially lead to a wasting of all upstream resources.

In my company, the project managers will prefer to continue with a project even if a cut occurs. They do not want to waste resources that have already been invested in a project. As a result, they come down extremely hard on the people working on the remaining segments of the product. In order to minimize waste and make sure the project can be completed.